Paradiso Yacht Charters

John Pringle is all business when he talks about the yacht he recently bought.

With an MBA in finance and a career in IT consulting, Pringle evaluates the 85-foot Pacifica motor yacht called Paradiso not as a luxury toy but in terms of the financial bottom line. He talks about breaking even at 100 charters a year and his ability to accommodate the average Newport Beach wedding, which his research indicates has 65 guests. He calculates that he is halfway to his five-year goal of building Paradiso Yacht Charters into a company that will allow him to retire from corporate America someday.

With 42 miles of Pacific Ocean coastline, Orange County is home to many water-oriented small businesses. Their owners may enjoy their ventures more than they like crunching numbers, as Pringle does, but they still must bring a business attitude to survive.

“Everything I do is extremely intentional,” Pringle said. “I think of everything related to the Paradiso from a business perspective. I have a long-term plan for three yachts: the Paradiso, a larger one to accommodate 200 people and a smaller one for private parties and burials at sea.”

Pringle's first exposure to yacht charters was as a customer. Unocal was one of his largest IT clients, and he arranged a boat party for its executives visiting from Chicago. That party went so well that he started hosting floating client and employee parties for the Newport Beach Christmas boat parade that became so popular that he had waiting lists.

“This was a great gig so I put together a business plan for a charter company,” he said. “I asked, ‘If I bought a boat, how many times would I have to rent it out to break even?' It was business, not pleasure. But within three months, I bought the Legend, a 65-foot Chris-Craft. That was 1998.”

A key factor for success, he said, is Coast Guard certification, which is available only to hulls made in the United States. “That's a significant barrier to entry … and to get certified requires a significant corporate investment,” Pringle explained.

People charter yachts like the Legend for corporate events, fishing parties, Catalina Island trips and funerals. His research into the Newport Beach wedding market, however, revealed that the Legend's 49-passenger capacity was too small.

In 2005, Pringle sold the yacht but kept the Legend Charters name. He continued as a broker, and he chartered the Paradiso and other yachts. When the Paradiso's owners wanted to sell, they asked Pringle if he was interested.

But the small-business loan market had changed dramatically, he said. He had easily gotten a business loan to buy the Legend in 1998, but lenders froze new credit after the recession and financial meltdown of 2008.

“The decline in bank lending was far more severe for small businesses than for larger firms,” the Office of Advocacy within the U.S. Small Business Administration reports. “Banking lending to small firms rose from $308 billion in June 1994 to a peak of $659 billion in June 2008, but then declined by almost 18 percent to only $543 billion in June 2011.”

Pringle said he couldn't get a business loan in 2009 even though his credit score was 820. So the seller financed the $760,000 deal with the understanding that payments will increase dramatically over time to encourage Pringle to find alternative financing as soon as possible.

Even as the lending environment eased, lenders insisted that Pringle use his Orange County home as loan collateral, which he was unwilling to do. Earlier this year, Pringle approached a microlender he has worked with previously but the loan maximum was too small for his need. He was referred to Stultz Financial, a Newport Beach firm that advises community banks on SBA lending.

“Not a lot of lenders will do boat loans,” said Jim Ely at Stultz Financial. “In the 28 years I've been doing SBA loans, I've only done three for boats. Those were through the Bank of Newport, which closed years ago.”

John Pringle, owner of Paradiso Charters, poses on his yacht in Newport Beach. EUGENE GARCIA, THE ORANGE COUNTY REGISTER
John Pringle, owner of Paradiso Charters, poses on his yacht in Newport Beach. EUGENE GARCIA, THE ORANGE COUNTY REGISTER
John Pringle, owner of Paradiso Charters, points out one of the diesel engines planned for replacement on his yacht in Newport Beach. EUGENE GARCIA, THE ORANGE COUNTY REGISTER
An aging fuel delivery system panel is planned for replacement by John Pringle, owner of Paradiso Charters in Newport Beach. EUGENE GARCIA, THE ORANGE COUNTY REGISTER
The interior of the Paradiso, a charter yacht owned by John Pringle, is scheduled for many upgrades at its dock in Newport Beach. EUGENE GARCIA, THE ORANGE COUNTY REGISTER
The bar area of the Paradiso, a charter yacht owned by John Pringle, in Newport Beach. EUGENE GARCIA, THE ORANGE COUNTY REGISTER

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